Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

As a result Question- 2-a: The president believes that sales in the West Division could be increased by 16% if monthly advertising in that division

image text in transcribedAs a result Question- 2-a: The president believes that sales in the West Division could be increased by 16% if monthly advertising in that division were increased by $25,000. Calculate the incremental net operating income.

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows: $ Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) 1,597,000 572,910 1,024,090 1,126,000 (101.910) S In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: East Division Central $ 680,000 $ 377,000 West $540,000 Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 290,008 % S 325,005 % $ 202,00 Required: 1. Prepare a contribution format income statement segmented by divisions, as desired by the president. Sales Variable expenses Contribution margin Traceable fixed expenses Divisional segment margin Common fixed expenses not traceable to divisions Net operating loss Total Company $ 1,597,000 572,910 1,024,090 817,000 207,090 309.000 $ (101,910) East $ 377,000 162, 1107 214,890 290,000 $ (75,110) Division Central $ 680,000 238,000 442,000 325,000 $ 117,000 West S 540,000 172,800 367,200 202,000 S 165,200 2-a. As a result of a marketing study, the president believes that sales in the West Division could be increased by 16% if monthly advertising in that division were increased by $25,000. Calculate the incremental net operating income. Incremental net operating income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter 15 - Liability Tricks

Authors: Kate Mooney

2nd Edition

0071719377, 9780071719377

More Books

Students also viewed these Accounting questions

Question

3. Use the childs name.

Answered: 1 week ago

Question

What lifestyle traits does your key public have?

Answered: 1 week ago